Acceptable reason for unemployment gap
2,189In June of this year I was pre-approved for a home loan. I have an employment gap that occurred between July 2011 and February 2012. My broker said that the lender will need a letter explaining the gap. What is a standard reason that is generally acceptable to lenders? I basically stopped working and lived off my savings for a while...........just enjoyed life! However, Id like to give a reason that wont make me appear to be a risk.
5 answer(s)
About 10 years ago
If you are working with a mortgage broker they should be able to guide you. If you are working directly with your bank or credit union - you should get the advice of a good mortgage broker who will guide you in this scenario.... Truthfully there will not be many good answers .
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DislikeAbout 10 years ago
How does your broker know that you will need a letter explaining your time off of work?
You are preapproved for your financing. Chances are good that your lender may not ever ask for any explanation. Especially if your income and debt ratios are acceptable, and you are employed now in the same line of work you've been doing for at least two years, and your tax returns and most recent bank statements and income statements all check out okay ,
If and When your lender asks for something, at that moment discuss what the lender would deem is a reasonable explanation, (get an example from the lender); stating you wanted to take an extended vacation from work and get some rest is probably going to be okay.
Honesty is the best policy.
You are preapproved for your financing. Chances are good that your lender may not ever ask for any explanation. Especially if your income and debt ratios are acceptable, and you are employed now in the same line of work you've been doing for at least two years, and your tax returns and most recent bank statements and income statements all check out okay ,
If and When your lender asks for something, at that moment discuss what the lender would deem is a reasonable explanation, (get an example from the lender); stating you wanted to take an extended vacation from work and get some rest is probably going to be okay.
Honesty is the best policy.
About 10 years ago
Just be honest!
If you were pre-approved the lender has everything they need at this time to conditionally approve you. If the underwriters request that information, just be prepared to answer them honestly.
In my opinion, if you had the money to do that and you still have funds to put down and cover out of pocket closing costs and your debt to income fits in the appropriate percentage and you have had a consistent job since that time, I would think it all checks out ok. BUT, I'm not an underwriter. ;)
If you were pre-approved the lender has everything they need at this time to conditionally approve you. If the underwriters request that information, just be prepared to answer them honestly.
In my opinion, if you had the money to do that and you still have funds to put down and cover out of pocket closing costs and your debt to income fits in the appropriate percentage and you have had a consistent job since that time, I would think it all checks out ok. BUT, I'm not an underwriter. ;)
Disclaimer: Answers provided are just opinions and should not be accepted as advice.
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